‘Free-for-all’ to follow EU ruling

In the wake of the EU court ruling in the Vaxholm case, EU-legal experts expect Latvian companies will have a "free-for-all" in Sweden employing Latvian workers at wages lower than the Swedish average.

The judgment handed down last week by the European Court of Justice found that the Swedish union Byggnads went too far in blocking Latvia construction company Laval’s work site in Vaxholm in 2004. The judgment was a severe blow to Swedish unions and the government, which has supported the union’s position.

Several EU experts believe the judgment paves the way for more Latvian companies to start working in Sweden. Companies with a valid collective bargaining agreement in Latvia could, according to the ruling, pay wages to Latvian workers assigned to Sweden on par with those paid to workers in Latvia.

“I believe that’s the understanding,” said Ulf Bernitz, professor in European law at Stockholm University. In his opinion, Swedish unions can no longer go on strike against companies from other EU member states who have collective bargaining agreements in their home countries.

Labor market Minister Sven-Otto Littorin has already called for deliberations with employers and the unions to discuss a possible change to Swedish law. Littorin stated earlier that the judgment restricts Swedish unions’ right to strike.

“It will be a tricky adjustment period for unions,” said Bernitz.

Jörgen Hettne, a researcher in European law at the Swedish Institute for European Political Studies (SIEPS), agrees. Following the EU court decision it becomes harder for Swedish unions to defend their labour agreements.

“The court has given Swedish legislation a failing grade and therefore we are entering into the Wild West right now. For the moment it’s a free-for-all. The ball is in the unions’ court,” said Hettne.

The judgment highlights a problem foreign companies who work temporarily in Sweden have learning ahead of time which wages must be paid. In most EU member states there is a statutory minimum wage which helps foreign companies know the costs involved with hiring workers in that country. Because Sweden lacks a statutory minimum wage, Byggnads has no way to defend its position said Hettne.

“Byggnads needs to draw up a simplified agreement, an instrument which can be used with foreign companies. In addition, some form of minimum wage must be established,” according to Hettne.

Erland Olauson from LO, Sweden’s main trade union association, confesses that the judgment creates problems for the unions. He believes that complex construction labour agreements are no longer going to work with foreign companies.

“That stands to reason,” he said. “But if Byggnads doesn’t want to put together a new construction labour agreement and instead is satisfied with simply demanding a new wage agreement which doesn’t diverge from what Swedish companies pay and in which wages are clearly stated in the agreement, then they are still allowed to take action, said Olauson.